With home prices high and listings low, potential buyers are frustrated. There is plenty of demand, but it is not translating into home sales and many first-time homebuyers are being priced out of the market.
Mortgage application volume fell two percent for the week, according to the Mortgage Bankers Association’s seasonally adjusted report. Last week’s decline was the lowest level since February after dropping for the fifth consecutive week.
The trouble stems from weakening home affordability and a supply-demand imbalance. Home prices continue to rise, but the supply of homes for sale is still low, especially at the entry-level market.
Home prices have continued to rise at more than twice the rate of income growth, and bidding wars, which were once an occasional occurrence are the rule rather than the exception for first-time or entry-level home buyers.
CNBC reported that “Strong inflation was overshadowed by ongoing trade tensions between the U.S. and China, along with concerns over Turkey’s currency situation,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “This helped push Treasury rates down by three basis points last week. The 30-year fixed-rate decreased three basis points as well, but mortgage applications still decreased.”
The shortage of homes for sale is not improving much. Homes are slowly starting to come on the market, but inventory is still significantly lower than a year ago and unfortunately, what is available is usually expensive.
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